Description:

This paper explains marginal analysis is the quantification of the time taken to serve the patient as the basis of cost, and any additional incurring dollars in this time frame are considered the marginal cost. The author stresses that, in health care organizations, there is no standardized service; therefore, quantifying health care service has become a great issue, and the marginal analysis method has become one of the keys for detecting the overall outcome of servicing each patient. The paper stresses that health care organizations run the risk of high costs and investments when they do not monitor operational costs through marginal analysis, which detects unnecessary costs associated with the patient care.

From the Paper:

"On the other hand, the marginal benefit is the additional benefit or benefits that are derived from one more unit produced. Benefits therefore can be quantified by the units of utility or satisfaction level in dollar value. It can also be noted that marginal benefit or the satisfaction level gradually falls with each additional unit. This is because when there is an increase in the units that one consumes, satisfaction level decreases and hence there is a less demand for it. The level of efficiency of an organization is very much dependent on the management's ability to manage the resources to maximize production and hence to maximize the utility of the unit cost."